K-pop girl group NewJeans / Courtesy of Ador
Whether K-pop girl group NewJeans will reunite with former Ador CEO Min Hee-jin, the creative mind behind the five-member act, is drawing keen attention as tensions rise over contract disputes.
Some industry insiders believe it will be challenging for NewJeans to align with Min, with a key obstacle being the massive penalty associated with terminating their contract.
A KakaoTalk conversation between Min and two former Ador executives in March was disclosed by online media outlet Chosun.com on Sunday, in which they discussed the estimated penalty they should pay in case of the contract termination of NewJeans with Ador.
Their estimated termination penalty was calculated to be up to 620 billion won ($440 million), with the conversation records disclosed during the injunction trial Min filed against HYBE to prohibit the exercise of voting rights against her.
In the conversation, one executive explained that if the average monthly revenue per member is set at 2 billion won and the termination date is assumed to be the end of June, the remaining contract period of approximately 62 months would result in an estimated penalty of 124 billion won per member, totaling 620 billion won for all five members.
Min downplayed the estimated penalty, saying, "That's not too much."
The termination penalty follows the Fair Trade Commission's standard exclusive contract template, which calculates penalties by multiplying the remaining contract period by the average monthly revenue from the past two years.
The members of NewJeans, who debuted in July 2022, still have five years left on their contracts. Even if the group were to pay the penalty and proceed with legal action, proving Ador's fault would be challenging, as no specific contract breaches have been disclosed.
Furthermore, NewJeans have received top-tier treatment in the industry, with a reported total of 26.1 billion won distributed among the members in just two years, the highest for any K-pop girl group.
Under civil law, courts have the authority to adjust penalties if they are deemed excessive or unreasonable, making this a key point of contention in the case.
Lawyer Sun Jong-moon said, “The reasons NewJeans has provided might not hold up as grounds for termination according to industry standards. But even if they lose, penalties could be reduced based on the court's discretion under civil law, and the case could go all the way to the Supreme Court given the stakes involved.”
The penalty amount could potentially be reduced at the court's discretion. However, even with adjustments, each member may still be liable for hundreds of billions of won, raising doubts about whether a group that debuted just two years ago can bear such a financial burden to leave their agency.
NewJeans member Hanni wipes away tears during the Environment and Labor Committee's audit at the National Assembly in Yeouido, Seoul, Oct. 15. Yonhap
NewJeans vs. Ador
On Nov. 13, NewJeans sent a formal legal notice to Ador, demanding the reinstatement of former CEO Min and stating that they would terminate their exclusive contract if their demands were not met within two weeks.
However, with Min resigning from her position as an internal director at Ador on Nov. 20, her return has become impossible. Consequently, it is unlikely that NewJeans' demands will be fulfilled by the Wednesday deadline.
As the date approaches, speculation mounts over whether the group will proceed with a legal battle against Ador over their exclusive contract, despite the astronomical penalties involved.
The group alleges they faced mistreatment, including overhearing a manager telling others to “ignore” Hanni, one of the members, and encountering internal documents suggesting plans to exclude NewJeans from future strategies.
If NewJeans can substantiate these claims, they may argue that the trust in their relationship with Ador and HYBE has irreparably broken down, potentially justifying contract termination.
Ador has denied the existence of the manager accused of disrespecting Hanni.
Min Hee-jin, the former CEO of Ador, a subsidiary of HYBE / Yonhap
Escalating legal battles and NewJeans' next move
Min and NewJeans may be preparing for a fresh start outside of HYBE, especially as the group has hinted at a potential lawsuit to terminate their exclusive contract with Ador.
Min has declared her intent to hold HYBE legally accountable for alleged breaches of contract. "I will pursue legal actions step by step regarding the numerous illegal activities committed by HYBE and its affiliates," she said.
Min filed a criminal complaint against HYBE's public relations executives on Monday, alleging misconduct in promoting NewJeans. She lodged the complaint with Yongsan Police Station in Seoul, accusing HYBE's Chief Communication Officer Park Tae-hee and a PR director, identified only as Cho, of breaching their duties.
The accused executives are part of HYBE's shared PR team, which oversees promotional activities for artists under its sublabels, including NewJeans.
The complaint followed Min's Nov. 20 lawsuit at the Seoul Central District Court to exercise her put option, seeking approximately 26 billion won for her shares.
HYBE maintains that the shareholder agreement with Min was already nullified due to her alleged misconduct, setting the stage for a legal battle over the put option payment.
Min has consistently expressed her dedication to NewJeans, stating her ambition to achieve dreams together with the group.
Similarly, NewJeans has shown unwavering support for Min, requesting her reinstatement and even threatening to terminate their exclusive contract with Ador if their demands were not met.
At a recent awards ceremony, the group hinted at uncertainties about their future, saying, "We don't know how long we'll be NewJeans, but we hope to stay together until the end."
A visitor takes a photo at the main building of HYBE, the parent company of Ador, in Seoul, Feb. 10. Yonhap
HYBE's response
Following Min's departure from Ador and HYBE, there is growing speculation that NewJeans may file for a provisional injunction to suspend their exclusive contract with Ador by the end of this month.
Min has expressed her commitment to NewJeans, both during her tenure at Ador and in her recent statements.
Her actions and words suggest that she plans to continue working with the group as they navigate their next steps outside of HYBE as she said, "I hope you will continue to show interest in the new K-pop journey I plan to embark on."
For its part, in a statement regarding Min's resignation, Ador said, “We regret her unilateral decision to step down but remain committed to supporting NewJeans to help them grow and thrive.”
As Min shifts her focus to legal battles and potential new beginnings, all eyes are on NewJeans and whether they will follow her lead into uncharted territory.
This article, based on a piece from the Hankook Ilbo, the sister publication of The Korea Times, was translated by generative AI and edited by The Korea Times.